China's August producer inflation eases

Business Monday 10/September/2018 13:57 PM
By: Times News Service
China's August producer inflation eases

Beijing: China's producer inflation cooled in August amid softening domestic demand, pointing to a steady slowing in growth in the world's second biggest economy as it confronts heightened risks to the outlook from a heated trade dispute with the United States.
Consumer inflation, on the other hand, picked up more than expected in August, though policy makers are likely to stay focused on growth rather than pricing pressures as US President Donald Trump raises the stakes in the tariff war.
The producer price index (PPI), a gauge of industrial profitability, rose 4.1 per cent in August from a year earlier, compared with a 4.6 per cent increase in July, according to data released by the National Statistics Bureau on Monday.
Analysts polled by Reuters had expected August PPI would rose to 4.0 per cent. On a monthly basis, PPP picked up from 0.1 per cent in July to 0.4 per cent in August.
Raw material prices rose 7.8 per cent in August from a year earlier, compared with a 9.0 per cent increase in July.
"Despite soft industrial output in the third quarter, domestic polices such as boosting infrastructure spending could provide some support to prices of related industrial goods in the fourth quarter,” said Betty Wang, Hong Kong-based senior China economist at ANZ, noting that month-on-month PPI growth has been picking up.
China's economic growth cooled slightly to 6.7 per cent in the second quarter, though worries about a sharper slowdown have increased in recent months amid rocky trade relations with the United States.
The two countries have already slapped tit-for-tat tariffs on $50 billion of each other's goods, and US President Donald Trump has warned that he was ready to slap tariffs on virtually all Chinese imports into the United States.
With domestic and foreign demand slowing, and export orders in both official and private factory surveys extending their declines in August, investors have cause to be nervous about China's outlook.
China's policy makers are trying to keep the economy on an even keel as the dispute with the United States threatens to dent output.
The government has responded by loosening its liquidity tap in money markets and speeding up infrastructure projects as it eyes expansionary fiscal policy to support growth. Beijing has approved new railways in six cities in August.
On a year-on-year basis, the consumer price index (CPI) rose 2.3 per cent in August, fastest pace since February this year and above expectations of 2.2 per cent. It also accelerated from July's 2.1 per cent.
The food price index climbed 1.7 per cent from a year earlier as vegetable prices rose, while non-food prices grew 2.5 per cent in August.
On a month-on-month basis, the CPI increased 0.7 per cent.
China has set an inflation goal of 3 per cent for 2018, same as last year.
The core consumer price index, which strips out volatile food and energy prices, rose 2.0 per cent in August, compared with 1.9 per cent in July.